At its meeting today, the Payments System Board discussed a number of issues, including:
- The New Payments Platform (NPP). The Board discussed progress by financial institutions in rolling out NPP payments to their customers. Members remain disappointed with the progress made by some major banks and expect their commitments to be met. Members also discussed the response by NPP Australia (NPPA) to the conclusions of the consultation recently conducted by the Bank and the ACCC on NPP functionality and access. Members welcomed NPPA’s confirmation that it would publish a roadmap for delivering new functionality and that it had already approved a compliance framework that would allow it to mandate certain core capability requirements for NPP participants. Given its public interest mandate, the Board is expecting this roadmap to be ambitious and to be implemented.
- The assessment of the ASX clearing and settlement facilities against the Bank’s Financial Stability Standards. The Board approved the Bank’s 2019 assessment, which will be published after it has been provided to the Treasurer and the Australian Securities and Investments Commission.
- Developments in the ATM industry. There has been further rationalisation of ATM fleets by some banks and other deployers during the past year in the context of a continuing decline in ATM use. To date, the removal of ATMs has been largely concentrated in locations where there were other machines in close proximity, so that access has not significantly diminished. Members discussed the constructive role that industry-led solutions can play in improving efficiency, while ensuring the community’s continued access to cash.
- The future of the ATM Access Regime. In light of the various changes in the ATM industry, members reviewed the rationale for retaining the ATM Access Regime. They agreed that while the policy case may not be as strong as when the Regime was introduced a decade ago, it could still serve a useful purpose in promoting fair access to the ATM industry. In particular, it could help promote the evolution of the industry in a way that supports the efficient and sustainable provision of ATM services across the country. Having taken account of the views of stakeholders, the Board agreed to retain the Access Regime in its current form, with another review to take place in 2–3 years.
- Least-cost routing (LCR) of contactless debit card transactions. The major banks and many smaller acquirers have now made LCR functionality available to merchants, though in some cases, banks are only offering LCR on a relatively narrow range of terminals or merchant plans, or to a limited range of merchant types. The Board discussed the importance of banks ensuring that LCR is genuinely available to a wide range of merchant customers and that merchants are provided with information about the full range of payment options.
- The industry’s work to combat card-not-present (CNP) payment fraud. The latest industry payment fraud statistics show a slowing in the rate of growth in CNP fraud losses in 2018. Members welcomed the recent introduction of an AusPayNet-administered industry framework to mitigate CNP fraud, which aims to strengthen the authentication of online CNP transactions and keep fraud rates below industry-agreed thresholds. They encouraged participants in the e-commerce industry to actively support the new framework and asked Bank staff to monitor implementation and the impact on CNP fraud.
- Crypto-assets. The Board discussed the announcement by Facebook of the proposed introduction of a ‘global cryptocurrency’ as well as a new Facebook subsidiary to provide digital wallet services. Bank staff will continue to coordinate with relevant domestic and overseas regulators, to ensure that any payments system implications are appropriately addressed before any launch.
- Developments in digital identity. Members discussed the importance of an effective system of digital identity in promoting competition, security and innovation in the Australian payments system. Members welcomed the progress made by the Australian Payments Council (APC) on developing a framework to support the development of interoperable digital identity services and encouraged the industry to continue to work collaboratively and with government agencies on digital identity solutions.
- Migration to ISO 20022. The Board was briefed on the consultation being undertaken by the Bank and the APC on migration of some existing messaging formats used widely in payments clearing and settlement to a new format that uses the International Organization for Standardization (ISO) 20022 standard. A broad range of stakeholders had provided submissions to the initial consultation paper. The Bank and the APC intend to release a second consultation paper in the next month that will canvass some implementation options.
- Regulatory reforms for financial market infrastructures (FMIs). The Board noted that the Council of Financial Regulators agencies have been working on proposals for FMI regulatory reforms, including enhancements to supervisory powers, changes to licensing arrangements and introduction of crisis management powers. A consultation is planned for late 2019.
The Board is meeting this afternoon with the Australian Payments Council.